Desperate Sandesara praying OVL will buy

Vol 16, PW 18 (04 Apr 13) Exploration & Production
     

Vadodara-based Sandesara Group needs cash fast but OVL is taking its own sweet time to evaluate Sandesara's offer of up to 30% at four Nigerian blocks.

In January, chartered accountant turned entrepreneur Nitin Sandesara, 53, personally flew to Delhi from London, where he lives, to sign a confidentiality agreement with OVL for the potential stake sale. But OVL cautions us not to get too excited.

“Don’t read too much into the signing of this confidentiality agreement,” says a source. “This is a standard legal document we sign with dozens of proposers every year.

” OVL will complete due diligence on the four Nigerian blocks only by June. “Unless the merit of the case is high OVL will not re-enter Nigeria in a hurry,” adds OVL.

“Doing business in Nigeria is difficult.” Earlier this year ONGC Mittal Energy (OMEL) relinquished deepwater exploration block OPL-279 in Nigeria after the Nigerian government insisted on OMEL setting up a $6bn refinery.

OMEL might also relinquish its second Nigerian deepwater block OPL-285. But Sandesara is offering OVL stakes at blocks OPL-277, OPL-280, OPL-2005 and OPL-2006, which together hold proven oil reserves of 280m barrels and 2-tcf of gas.

Sandesara is desperate for funds ever since its BSE-listed flagship company Sterling Biotech defaulted on $184m of ‘foreign currency convertible bonds’ that matured on May 17, 2012. This was the largest default by an Indian company on debt that can be swapped for shares, forcing the Bank of New York Mellon to file a case against Sandesara last October in the Bombay High Court.